CPI Report: Last Inflation Reading Before Fed's Decision
The upcoming Consumer Price Index (CPI) report on Friday, September 11th, is crucial for the Federal Reserve's decision on interest rates. The August CPI print will be the last major inflation reading before the Fed votes to either hold or hike rates.
July's CPI rose by 0.1% month-on-month and 3.4% year-over-year. Economists expect a firmer headline for August, around 0.4% month-on-month, with the annual rate little changed at 3.3-3.4%. Core CPI is expected to be around 0.2% month-on-month and 2.3-2.4% year-over-year.
Markets are positioned for a 25 basis-point hike next week, but economists remain cautious. The Fed's Committee is split, with three members already wanting tighter policy. A Reuters poll still has a majority looking for a hold, even as the share expecting at least one hike this year has risen.
A hotter-than-expected CPI print could lead to equities taking the first hit, followed by bonds selling and the dollar catching a bid. On the other hand, a softer-than-expected print would likely see equities rally, led by duration-sensitive growth and housing-related names.